Shai Agassi Launches Electric Car Startup, Raising $200M

Shai Agassi, the entrepreneur who, at one time, was expected to take over the CEO role at SAP, said today that he has formed “Project Better Place,” a venture focusing on electric vehicles, and is raising an initial $200 million to fund the project. When Agassi announced his resignation from software company SAP (SAP) last March, he said he looked forward to working on alternative energy issues. Aren’t we all these days? This, however, is no small undertaking.

The company says it will work with car and battery makers so that subscribers to the network can get subsidized vehicles, but consumers will still own their cars. The WSJ says that the company will buy and own the batteries and that Agassi expects the subscription to be less than the economics for current gas-based cars.

Update: We chatted with Tesla’s VP sales, marketing & service, Darryl Siry, about Agassi’s venture, and he said that anything that provides more places to charge Tesla cars, the better. We welcome the distribution of charging stations, he said.

While Siry said that the details of Agassi’s business model are still unclear, he also pointed out that the model of leasing batteries is unproven because there is no secondary market currently available to buy those older batteries. Siry also compared the idea of battery exchangecharging stations to the propane business, and noted that this is a technically challenging model to pull off. “No one has figured out how to practically do that, but if they could it would be very compelling,” Siry said.

The company says that over the next two years, it will build out the infrastructure and put hundreds of thousands of vehicles into its network, and it hopes to have the system widespread within 10 years. In the release the company says its “new grid presents a practical solution to address barriers to electric vehicle adoption.”

As GigaOM readers well know, any venture focused on building out infrastructure and a network approach requires a massive amount of capital. And as the WSJ points out, Agassi has no background in the auto or energy industries. The plan will likely take billions of investment to build, and will depend heavily on developing those industry relationships.